July 27th, 2005
IT consultant names five competitive forces affecting VoIP
Telecommunications information technology consultant John Myers is a rarity: a technical architect and systems integrator with both a ground-level take on appropriate solutions, as well as a broad view on competitive market forces that affect companies making these deployment decisions.
He’s combined both perspectives to write a fascinating article for the Business Intelligence Network website called "Telecom Business Intelligence: The Five Forces of a Highly Competitive Industry."
In the piece, he recalled a 1980-vintage theory by competitive strategies expert Michael Porter about the "five forces" that constitute threats to a company’s competitive advantage in an industry.
Myers lists these forces, and then lists his own "five forces" that can contribute to how the competitive nature of VoIP affects individual companies.
Porter’s "five forces" model, as cited by Myers, is:
- Degree of rivalry of existing industry competitors.
- Degree of barriers to entry by new competitors in the industry.
- Threat of substitute products/services.
- Bargaining power of buyers.
- Bargaining power of suppliers.
Myers concepts, as he views their application to VoIP competition, are industry consolidation, competition from cellular networks via wireless LANs; security and fraud concerns; pricing, and what he views as the eventual effect that the topping out of the broadband penetration rate (which he argues is already happening) will have on VoIPs ability to grow.
After Myers cites each of these factors, he explains their individual and collective effect on the competitive VoIP landscape.
A lot of this is heady, management-science stuff, but it is real-world enough to earn a read.
Russell Shaw is an enterprise computing journalist, analyst and author based in Portland, Oregon. See his full profile and disclosure of his industry affiliations.
